Test 4 on Market Structures: ECO

Shut down

A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 200 units is $4.00. The minimum possible average variable cost is $3.50. The market price of the product is $3.00. To maximize profits or minimize losses, the firm should:

Neither industry has significant barriers to entry

A monopolistically competitive industry is like a purely competitive industry in that:

Mutual interdependence

A unique feature of an oligopolistic industry is:

5

Answer the question based on the demand and cost schedules for a monopolistically competitive firm given in the table below. Refer to the above table. What output quantity will the monopolistically competitive firm produce to maximize profits?

Q = 15

Answer the question based on the table below. At what quantity would a purely competitive firm cover all of its costs and earn only normal profits?

Continue operating in the short run

As president and owner of the Sour Grapes Lemonade Company, you know that you face: To maximize your financial well-being, you should:

Profit

At equilibrium, the profit-maximizing monopolist facing the situation shown in the graph will face a negative:

Can result from government regulation

Barriers to entry:

Is able to use barriers to entry and maintain positive economic profits in the long run

Compared to the purely competitive industry, a pure monopoly:

X3 since any increase in output will reduce profits

Given the diagram above, which level of output should the entrepreneur choose?

Perfectly elastic

If a firm is a price taker, then the demand curve for the firm's product is:

Price leadership

If a particular bank regularly announces changes in its interest rate schedules before its competitors, who then set rates very close to those announced by that bank, this could be described as:

Few sellers

In an oligopolistic market there are:

Retail trade

In which industry is monopolistic competition most likely to be found?

Pure competition

In which market model are the conditions of entry into the market easiest?

Pure monopoly

In which market model are the conditions of entry the most difficult?

Pure monopoly

In which market model would there be a unique product for which there are no close substitutes?

Harry's should stay open in the short run

Let us suppose Harry's, a local supplier of chili and pizza, has the following revenue and cost structure:

Pure monopoly

Local electric or gas utility companies mostly operate in which market structure?

Marginal cost = marginal revenue

Many people believe that monopolies charge any price they want to without affecting sales. Instead, the output level for a profit-maximizing monopoly is determined by:

Transform monopolistic competition into oligopoly

Mergers of firms in an industry tend to:

Producing differentiated products

Monopolistic competition is characterized by firms:

Oligopoly

Mutual interdependence would tend to limit control over price in which market model?

Extensive economies of scale in production

Natural monopolies result from:

The monopolist produces a product with no close substitutes

One defining characteristic of pure monopoly is that:

Slopes downward

One feature of pure monopoly is that the demand curve:

A price maker

One feature of pure monopoly is that the firm is:

Ownership of essential resources

One major barrier to entry under pure monopoly arises from:

A to B and become less elastic

Refer to the above graph for a monopolistically competitive firm. A successful advertising campaign by the firm will cause its demand curve to shift from:

0V

Refer to the above graph for a profit-maximizing monopolist. The firm will produce the quantity:

0J

Refer to the above graph for a profit-maximizing monopolist. The firm will set its price at:

P3, Q1

Refer to the above graph for an industry. If the industry were served by a pure monopoly, the price and output quantity would be:

MC and MR, respectively

Refer to the above graph of a representative firm in monopolistic competition. If curve (2) represents ATC and line (3) represents demand, then curve (1) and line (4) would be:

A and D

Refer to the above graph of the representative firm in monopolistic competition. The long-run equilibrium price and output for this firm will be:

0A

Refer to the above graph. The firm should shut down if the quantity of output that it could sell falls below:

D

Refer to the above graphs. A short-run equilibrium that would produce losses for a monopolistically competitive firm would be represented by graph:

A

Refer to the above graphs. A short-run equilibrium that would produce profits for a monopolistically competitive firm would be represented by graph:

90

Refer to the graph above for an industry. If the industry operates as a pure monopoly, the output quantity would be:

$16

Refer to the graph above for an industry. If the industry were a pure monopoly, the product price would be:

B

Refer to the graph above. What is the profit-maximizing level of output for this pure monopolist?

P = $14; Q = 4

The data below relate to a pure monopolist and the product it produces. What is the profit-maximizing output and price for this monopolist?

The same as the industry's demand curve

The demand curve confronting a non-discriminating pure monopolist is:

Is the same as its marginal revenue curve

The demand curve faced by a purely competitive firm:

Reflects some level of control over its own price

The downward-sloping demand curve of a monopolistic competitor:

$65 and produce 35 units of output

The graph depicts a monopolistically competitive firm. Refer to the above graph. In the short run, this monopolistically competitive firm will set price at:

Larger the number of competitors

The monopolistically competitive seller's demand curve will become more elastic the:

4

The table shows the total costs for a purely competitive firm. Refer to the above table. If the product sells for $1,200 a unit, the firm's profit-maximizing output is:

Oligopoly

The tablet-computer market is best characterized as a(n):

Monopolistic competition

There would be some control over price within rather narrow limits in which market model?

$40

Use the table below to answer the question for a purely competitive firm. Refer to the above table. The marginal revenue from the third unit of output is:

Oligopolistic competition

When near-monopolies like Google in Internet search and Amazon in online shopping start infringing on each other's turf, what kind of competition results?

Price takers

Which characteristic would best be associated with pure competition?

Products are standardized or homogeneous

Which is a feature of a purely competitive market?

Pure monopoly

Which market model assumes the least number of firms in an industry?

B

Which of the above shows the correct relationship between demand and marginal revenue?

Patents and licenses

Which of the following is a barrier to entry?

Relatively easy entry

Which of the following is a characteristic of monopolistic competition?

Profit maximization

Which of the following is not a barrier to entry in an industry?

The industry- or market demand is highly elastic

Which of the following is not a necessary characteristic of a purely competitive industry?

Easy entry, many firms, and differentiated products

Which set of characteristics below best describes the basic features of monopolistic competition?